Deal reached on Net tax bill

Federal legislation to temporarily safeguard the Net from new taxes is ready to roll after lawmakers compromise with state officials.

March 20, 19983:35 PM PST

Federal legislation to temporarily safeguard the Net from new taxes is primed to
move forward after federal lawmakers struck a compromise with state and local officials.

Despite President Clinton's endorsement of the Internet Tax Freedom Act,
Rep. Chris Cox (R-California) announced he
will alter his bill to appease local leaders who have strongly opposed the proposal.

As introduced in the House and Senate, the
act would have placed a
six-year ban on states and localities passing new taxes specifically aimed
at online access, e-commerce, and other Net services. The moratorium will
be shortened to three years under Cox's revisions.

But an aide to Sen. Ron Wyden (D-Oregon), sponsor of a leading Senate bill on the
issue, said his boss was "consulted" on the new
House language but does not support it.

"Wyden continues to support the legislation as passed by the Senate
Commerce Committee," the aide told Reuters. "He thinks we
have a good bill and we can get it passed."

The amended Net Tax Freedom Act also will contain a so-called grandfather clause so that any taxes already imposed before March 1 will still be valid. The bill will create a commission to study whether the Net transactions or services should be taxed and, if so, how to avoid double
taxation and stunting the growth of e-commerce.

The House is expected to vote on the act this month, but the Senate version still contains the six-year moratorium. Earlier this month, Senate majority leader Trent Lott (R-Mississippi) said he would not push forward the bill, as long as local
officials objected to it.